B-124989, SEP. 22, 1955

B-124989, SEP. 22, 1955

TO MR. GARTH RUDD, AUTHORIZED CERTIFYING OFFICER, DEPARTMENT OF THE INTERIOR:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 1, 1955, REQUESTING A DECISION AS TO THE PROPRIETY OF CERTIFYING A VOUCHER IN FAVOR OF THE LONG-BELL LUMBER COMPANY FOR THE AMOUNT OF $198,781.10, REPRESENTING PAYMENT UNDER THE PROVISIONS OF ARTICLE III, PARAGRAPH 2, OF SIUSLAW RIVER ROAD AGREEMENT NO. E-142, DATED AUGUST 30, 1954. THE AGREEMENT GRANTED TO THE GOVERNMENT A PERPETUAL EASEMENT COVERING A LOGGING ROAD KNOWN AS THE "LOWER SIUSLAW ROAD," AND EXTENDING THROUGH COMPANY AND GOVERNMENT-OWNED TIMBER LANDS LOCATED NEAR THE CITY OF AUSTA, LANE COUNTY, OREGON.

UNDER THE TERMS OF THE AGREEMENT OF AUGUST 30, 1954, THE GOVERNMENT PROPOSED TO EXPEND $1,800,000 IN THE ACQUISITION AND CONSTRUCTION OF A FEDERAL ROAD CONSISTING OF FIVE SEGMENTS, INCLUDING TWO EXISTING LOGGING ROADS WHICH HAD BEEN BUILT OR IMPROVED BY THE LONG-BELL LUMBER COMPANY. THE COMPANY GRANTED CERTAIN EASEMENTS AND RIGHTS-OF-WAY OVER ITS INTERMINGLED LANDS. IT AGREED TO MAKE FUTURE GRANTS, INCLUDING EASEMENTS FOR THE TWO EXISTING ROADS KNOWN AS THE ,LOWER SIUSLAW ROAD" AND THE "UPPER SIUSLAW ROAD," WHEN THE BOARD OF COUNTY COMMISSIONERS LANE COUNTY, OREGON, SHOULD HAVE APPROVED AN ORDER FOR VACATION OF COUNTY ROAD AND RIGHT-OF-WAY NO. 417. THIS ROAD AND RIGHT-OF-WAY APPEAR TO EXTEND THROUGH SEVERAL MILES OF COMPANY AND GOVERNMENT-OWEND LANDS, AND TO INCLUDE VARIOUS PORTIONS OF THE SEGMENTS DESIGNATED IN THE CONTRACT AS THE "LOWER SIUSLAW ROAD" AND THE "UPPER SIUSLAW ROAD.'

UPON THE APPROVAL AND RECORDING OF THE ORDER FOR VACATION OF THE COUNTY ROAD AND RIGHT-OF-WAY, AND UPON APPROVAL OF TITLE BY THE ATTORNEY GENERAL OF THE EASEMENTS COVERING THE TWO ROAD SEGMENTS, THE GOVERNMENT AGREED TO PAY TO THE COMPANY THE RESPECTIVE AMOUNTS OF $199,000 AND $5,400, STATED AS THE ESTIMATED REPLACEMENT COSTS OF THE EXISTING LOGGING ROADS ON SUCH SEGMENTS OF THE PROPOSED NEW CONSTRUCTION "WHICH ARE LOCATED ON COMPANY LANDS AND OUTSIDE OF THE COUNTY ROAD AND RIGHT-OF-WAY.' APPARENTLY THE NECESSARY CLEARANCES HAVE BEEN OBTAINED WITH RESPECT TO THE PAYMENT TO BE MADE FOR THE "LOWER SIUSLAW ROAD" SEGMENT, AND THE VOUCHER CERTIFICATE SHOWS THAT THE COMPANY CLAIMS THE AMOUNT OF $199,000, SUBJECT TO DEDUCTION OF THE SUM OF $218.90 FOR U.S. REVENUE STAMPS.

IT IS INDICATED IN YOUR LETTER THAT, DURING THE YEAR 1939, REPRESENTATIVES OF THE AUSTA LUMBER COMPANY, PREDECESSORS IN INTEREST OF THE LONG-BELL LUMBER COMPANY, ATTEMPTED TO HAVE THE COUNTY IMPROVE THE ROAD UP THE SIUSLAW RIVER, AND THAT THE COUNTY REFUSED TO IMPROVE THE ROAD BUT AUTHORIZED THE COMPANY TO MAKE ANY IMPROVEMENTS THAT IT DEEMED NECESSARY. THE ROAD WAS REBUILT BY THE LONG-BELL LUMBER COMPANY OR ITS PREDECESSOR FROM AUSTA UPSTREAM FOR A DISTANCE OF 15.4 MILES, WITH THE FIRST SEVEN MILES OF THE RECONSTRUCTED ROAD HAVING BEEN LOCATED ALMOST EXCLUSIVELY ON THE ORIGINAL COUNTY RIGHT-OF-WAY. OF THE LAST 8.4 MILES IMPROVED BY THE COMPANY, APPROXIMATELY 5.9 MILES HAD BEEN CONSTRUCTED OVER COMPANY-OWNED LANDS AND APPROXIMATELY 2.5 MILES OVER GOVERNMENT-OWNED LANDS.

YOU STATE THAT THE AGREED PAYMENT OF $199,000 COVERS ONLY THE APPROXIMATELY 5.9 MILES OF ROAD LOCATED EXCLUSIVELY ON LANDS OWNED BY THE LONG-BELL LUMBER COMPANY. HOWEVER, YOU REFER TO A PRIOR AGREEMENT WITH THE COMPANY (NO. E-66, DATED APRIL 8, 1952), WHEREIN CERTAIN GRANTS WERE MADE TO THE GOVERNMENT PURSUANT TO 43 CFR 115.162 (A) (2), INCLUDING THE RIGHT TO USE THE LOWER SIUSLAW ROAD. THAT AGREEMENT CONTAINS THE FOLLOWING PROVISION:

"THIS AGREEMENT IS SUBJECT TO AND MAKE IN ACCORDANCE WITH THE APPLICABLE REGULATIONS OF THE DEPARTMENT OF THE INTERIOR (43 CFR, SECTIONS 115.154 TO 115.179), INCLUDING BUT NOT LIMITED TO THE PROVISIONS THEREOF RELATING TO THE COMPENSATION TO BE PAID BY THE UNITED STATES AND ITS LICENSEES FOR THE USE OF THE ROADS, RIGHTS-OF WAY AND LANDS DESCRIBED UNDER SECTION 1/B) HEREOF. * * *"

THE QUESTION HAS, THEREFORE, BEEN RAISED AS TO WHETHER THE GOVERNMENT IS ENTITLED TO AN ADJUSTMENT IN THE PRICE TO BE PAID FOR THE EASEMENT COVERING THE "LOWER SIUSLAW ROAD," BASED UPON THE APPLICATION OF THE PROVISIONS OF 43 CFR 115.174, WHICH ARE, IN PERTINENT PART:

"SEC. 115.174. TERMS AND CONDITIONS OF PERMIT. (A) AS TO ALL PERMITS EVERY PERMITTEE SHALL AGREE:

"/5) IN THE EVENT THAT THE UNITED STATES ACQUIRES BY PURCHASE OR EMINENT DOMAIN THE LAND OR ANY INTEREST THEREIN, OVER WHICH THERE PASSES A ROAD WHICH THE UNITED STATES HAS ACQUIRED THE RIGHT TO USE UNDER SEC. 115.162, TO WAIVE COMPENSATION FOR THE VALUE OF THE ROAD, EQUIVALENT TO THE PROPORTION THAT THE AMOUNT THE UNITED STATES HAS CONTRIBUTED BEARS TO THE TOTAL ACTUAL COST OF CONSTRUCTION OF THE ROAD. SUCH CONTRIBUTION SHALL INCLUDE ANY INVESTMENT IN OR AMORTIZATION OF THE COST OF SUCH ROAD, OR BOTH, AS THE CASE MAY BE, MADE BY THE UNITED STATES OR A LICENSEE EITHER BY WAY OF DIRECT EXPENDITURES UPON SUCH ROAD, OR BY WAY OF PAYMENT BY THE UNITED STATES OR A LICENSEE TO THE PERMITTEE, OR BY WAY OF ALLOWANCE MADE BY THE UNITED STATES TO THE PERMITTEE IN ANY TIMBER SALES CONTRACT FOR SUCH AMORTIZATION OR CAPITAL INVESTMENT.'

ATTENTION HAS BEEN INVITED TO THE FACT THAT, UNDER THIS REGULATION, IF THE GOVERNMENT PURCHASES A ROAD WHICH IT PREVIOUSLY HAD ACQUIRED THE RIGHT TO USE UNDER SECTION 115.62, THE PERMITTEE IS REQUIRED TO WAIVE COMPENSATION TO THE EXTENT OF CONTRIBUTIONS PREVIOUSLY MADE TO THE PERMITTEE BY WAY OF ALLOWANCES IN TIMBER SALE CONTRACTS. IT IS REPORTED THAT, UNDER TIMBER SALE AGREEMENTS NOS. I-IL-317, DATED FEBRUARY 16, 1949, I-IL-1238, DATED AUGUST 2, 1951, AND 14-11-001-142, DATED NOVEMBER 12, 1952, WITH THE LONGBELL LUMBER COMPANY, ALLOWANCES WERE MADE IN THE RESPECTIVE AMOUNTS OF $3,112.50, $6,015 AND $13.60, TOTALING $9,141.10, FOR THE USE OF THE "LOWER SIUSLAW ROAD" FROM AUSTA TO THE SALE AREAS.

YOU STATE THAT THE REPLACEMENT COST OF THAT PORTION OF THE "LOWER SIUSLAW ROAD" WHICH IS LOCATED EXCLUSIVELY ON COMPANY-OWNED LANDS WAS DETERMINED BY AVERAGING APPRAISED VALUATIONS MADE BY THREE ENGINEERS EMPLOYED BY THE BUREAU OF PUBLIC ROADS; THAT THE ACTUAL AVERAGE VALUATION AMOUNTED TO $199,070; BUT THAT, IN ORDER TO ARRIVE AT A PRICE IN EVEN THOUSANDS, THE$70 WAS ARBITRARILY DROPPED.

IN REGARD TO THE QUESTION OF WHETHER THE PROVISIONS OF 43 CFR, SECTION 115.174 (A) (5), RELATE BACK TO ALLOWANCES MADE TO THE LONG BELL LUMBER COMPANY PRIOR TO THE DATE OF AGREEMENT NO. E-66, WHEN IT BECAME A PERMITTEE IN CONNECTION WITH GOVERNMENT-OWNED ROADS AND RIGHTS-OF-WAY IN THE PARTICULAR AREA, YOU EXPRESS THE OPINION THAT THE LANGUAGE OF THAT REGULATION AFFECTS ONLY SUCH TIMBER SALE ALLOWANCES AS WERE MADE TO THE COMPANY AFTER THE DATE OF SUCH AGREEMENT ON THE BASIS OF SUCH OPINION, THERE COULD BE NO RECOVERY OF ANY PART OF THE ALLOWANCES MADE UNDER THE TIMBER SALE AGREEMENTS OF FEBRUARY 16, 1949, AND AUGUST 2, 1951. AND, IN VIEW OF THE $70 DIFFERENCE BETWEEN THE AVERAGE OF THE COST ESTIMATES AND THE AMOUNT SET FORTH IN AGREEMENT NO. E-142 AS THE ESTIMATED REPLACEMENT COST OF THAT PART OF THE "LOWER SIUSLAW ROAD" WHICH IS LOCATED EXCLUSIVELY UPON THE LANDS OF THE LONG BELL LUMBER COMPANY, YOU SUGGEST THAT NO ACTION BE TAKEN WITH RESPECT TO THE ALLOWANCE OF $13.60 MADE UNDER THE TIMBER SALE CONTRACT EXECUTED SUBSEQUENT TO THE DATE OF AGREEMENT NO. E-66.

NOWHERE IN THE LANGUAGE OF 43 CFR, SECTION 115.174 (A) (5) IS THERE ANY INDICATION TO THE EFFECT THAT THERE SHOULD BE CONSIDERED ONLY SUCH TIMBER SALE ROAD-USE ALLOWANCES AS WERE MADE BY THE GOVERNMENT SUBSEQUENT TO THE TIME THAT AN APPLICANT HAD, IN CONSIDERATION OF THE GRANTING OF A PERMIT TO USE GOVERNMENT-OWNED ROADS AND RIGHTS-OF-WAY, AGREED TO ALLOW THE GOVERNMENT THE RIGHT TO USE A ROAD WHICH WAS CONTROLLED BY THE APPLICANT. FURTHER, THE INTENT OF THE REGULATION CLEARLY APPEARS TO BE THAT, IN THE EVENT OF SUBSEQUENT ACQUISITION BY THE GOVERNMENT, THE PRIVATE OWNER OF A LOGGING ROAD SHOULD NOT BE REIMBURSED FOR MORE THAN ITS ACTUAL COSTS OF CONSTRUCTION, LESS ALL REASONABLY APPLICABLE CREDITS FOR CONTRIBUTIONS MADE BY THE GOVERNMENT OR BY ITS LICENSEES, WHETHER MADE BEFORE OR AFTER THE DATE ON WHICH THE PRIVATE OWNER BECAME A PERMITTEE WITH RESPECT TO THE USE OF GOVERNMENT-OWNED ROADS OR RIGHTS-OF-WAY IN THE SAME LOCALITY. HOLD OTHERWISE WOULD, IN EFFECT, AUTHORIZE DOUBLE PAYMENT BY THE GOVERNMENT FOR SO MUCH OF THE PERMITTEE'S ROADS AS HAD BEEN CONSTRUCTED AT THE EXPENSE OF THE GOVERNMENT.

IN THE CIRCUMSTANCES SHOWN, AND IN THE ABSENCE OF ANY INDICATION THAT THE AMOUNTS OF THE PAYMENTS PROVIDED FOR BY PARAGRAPH 2 OF ARTICLE III OF THE AGREEMENT OF AUGUST 30, 1954, WERE DETERMINED TO REPRESENT THE COST OF THE ROADS INVOLVED, LESS THE AMOUNT OF ALL DIRECT OR INDIRECT GOVERNMENT CONTRIBUTIONS PREVIOUSLY MADE, WE ARE OF OPINION THAT THE VOUCHER SUBMITTED SHOULD NOT BE CERTIFIED.